IT is now more than eight months that the Pakatan Harapan-led government has administered the country since the general election was held on May 9. Hopes and aspirations are high on the rebooting of Malaysia as a competitive and well-governed nation.
Our elected parliamentarians and appointed senators, state representatives as well as experienced technocrats are accountable law makers and policy planners in the nation’s pursuit to maintain the rule of law; grow the economy; raise our income and net purchasing power; increase quality investments; creates jobs and help businesses and SMEs to grow, becoming globally competitive and succeed.
The government has rolled out the mid-term review of the 11th Malaysia Plan, the Industry4ward and the 2019 Budget. These documents and the budget have laid out short-and medium-term directions, initiatives and strategies to push Malaysia forward as an inclusive, progressive and competitive nation.
Our domestic economy has slowed down in recent quarters due to the drag from the supply shocks in both mining and agriculture sectors as well as a rationalisation of the Federal Government’s expenditure.
Market consensus expects real GDP growth to increase by between 4.0% and 4.9% in 2019.
While consumer spending is still holding well, the sustained strength of private investment remains to be seen as it grew by 4.5% in January-September 2018.
Exports too, have been growing unevenly by 6.9% in January-November 2018 due to the disruptions by the trade tensions and softening commodity prices.
Clearly, there is a lot of uncertainty feeding through the global economy and financial markets.
These include the on-going trade spats between the US and China; Brexit uncertainty, the Fed’s future interest rate tightening path and an apparent slowdown in China is also a key risk to watch in 2019.
Here’s our wish list for the government in 2019:
> Build a strategic narrative
With headwinds and changes happening so quickly from so many directions, the government and institutions should anticipate and address looming challenges before they affect our economy.
It is counter-productive to continue blaming on what had happened in the past. We have to move on to confront the brutal facts, and then provide remedies and solutions to deal with it.
Malaysians, domestic and foreign investors would certainly feel more reassuring as the government would remain firmly committed to maintaining good practices and governing through creating an open, transparent and providing equal opportunities for all based on the principle of meritocracy whilst strengthening social safety net for the vulnerable and needy group.
> Reinvigorating confidence
While the hard data on economic activity suggests that things are not in dire straits, we’re hearing anecdotal evidence that businesses are feeling somewhat pessimism or cautiously optimistic about this year’s economic outlook and business condition.
Some have claimed that there were yet clearer policy directions after more than eight months under the new administration. Businesses have adopted wait and see approaches because of the uncertainties they face in the global environment and some still getting in tune with domestic policy transition.
Business confidence, as measured by the RAM Business Confidence Index (BCI) from a poll of some 3,500 firms in Malaysia on their sentiment in the first six months of 2019, has fallen to the lowest level since the index began tracking in 2017.
One of the key factors driving firms’ sentiment this year is the weak economic prospects over the next six months.
We must break out from the negative self-fulfilling prophecies we are in. If such negative perceptions and sentiments were not nipped in the bud, this could further dent investors’ confidence and sentiment. Consumers too are feeling somewhat cautious about their spending plans ahead.
As we look ahead to a year that will bring enormous external challenges, we urge the administration to focus on areas in ensuring that investors have strong faith on the government’s pledges to be an effective facilitator to businesses and not overly burdened with bureaucracy and unnecessary regulatory and compliance costs.
Frequent upheavals or inconsistencies in the marketplace or uncertainty about the terms and directions of policies, guidelines and practices add a significant element of risk to longer-term business decisions.
> Policy clarity and certainty
Many government policies and actions affect the business environment. Even making a sweeping policy statement alluding to imminent changes without disclosure of details would send a wrong market signal and weigh on confidence and sentiment.
In this regard, the government and policy makers can foster the environment of certainty and stability that businesses and investors crave by making and executing right and market friendly policies with sufficient engagements and consultations with the industry players.
This means that the government and implementing agencies must keep an open mindset to set clear guidelines and regulations in the marketplace.
> Sustaining growth
The policy makers must continue to strengthen economic and financial fundamentals as well as institutions, setting the conducive conditions for continued economic growth by advancing the right policies, implement structural reforms and passing good legislation.
Let’s keep up the momentum through a swift and effective implementation of the 2019’s development expenditure projects, supported by meaningful structural reforms to ease the cost of doing business, the reform of foreign workers’ management and formulate a smart trade promotion and investment agenda that maximises our resource-based industries and competitive strength to uplift economic growth and minimises external shocks on our exports.
> Stop political bickering
Time and resources optimisation are essence. Our political leaders must walk the talk and create the change we need. They must spend less time focusing on disagreement and more time seeking meaningful compromise to formulate right policies for the country.
We must bridge the political divide to put our act together in sincerity and integrity, find workable consensus and do the right things for Malaysia and the people.
Lee Heng Guie is executive director at Socio-Economic Research Centre.